Magnetic Resources NL : Quarterly Activities Report - Ended 30 June 2017

Magnetic Resources NL

ABN 34 121 370 232

ASX Codes: MAU and MAUCA Level 1

44A Kings Park Road,

West Perth, WA 6005

T +61 8 9226 1777

F +61 8 9321 6571

PO Box 1388

West Perth WA 6872

Issued Capital:Shares - Quoted:

141,538,659 ordinary shares. 20,418,862 partly paid shares ($0.20 unpaid).

Options - Unquoted

• 4,000,000 options exercisable at$0.17 on or by 31 December 2017

• 150,000 options exercisable at

$0.18 on or by 31 December 2017

Cash: $0.73m

Directors: George Sakalidis

Managing Director

Eric Lim

Non-Executive Chairman

Julien Sanderson

Non-Executive Director

Company Secretary

Ben Donovan

• Shallow-dipping gold mineralized shear zone at HN3 is open both to the north and south and a drilling programme is planned to test this 150m-wide zone over a 500m length. There are 52 intercepts with more than 0.5g/t Au and 18 intercepts with more than 1g/t Au, generally being 1 to 4m thick with the highest value of 1m @ 13g/t Au from 22m in hole HNRC007.

• At the HN5 target a 750m-long N-S target zone has been defined by rock chip sampling with grades between 0.04 to 3.8g/t Au, RAB drilling and some RC drilling. A programme of soil sampling is being carried out over this target area as well as the adjoining Emerald workings to define anomalous gold targets within this 750m-long target.

• Rock chip sampling at HN4 has shown highly anomalous values ranging from 0.07 to 51.7g/t Au within two cherty ironstone (BIF) horizons, one of which has been traced intermittently for about 750m with evidence of old prospecting pits along its length. Eight of the 17 samples had over 1g/t Au. Further infill soil sampling is currently being carried out.

• At HN6 a 1.5km-long arcuate magnetic trend with some old gold diggings has anomalous gold in the range 0.06 to 0.70g/t Au recorded in amphibolite. A programme of soil sampling over the target zone is in progress.

• Shallow RAB drilling of aeromagnetic targets at the Mertondale and Christmas Well Projects, below the hardpan cover has identified eight targets totalling 6.8km containing gold and multielement anomalies This field work indicates that hardpan (cemented colluvium) cover is widespread and likely to render historical soil surface sampling ineffective opening up the Mertondale and Christmas Well Projects.

• Magnetic Resources NL has executed a Term Sheet for the acquisition by Northam Iron Pty Ltd of Magnetics Mt Joy, Ragged Rock, Kauring and Jubuk iron ore Projects.

Magnetic has completed a programme of RC drilling (13 holes for 1,900m) and shallow vertical RAB drilling (150 holes, 1,581m) on geophysical and geological targets at its Hawks Nest exploration licence (E38/3127) approximately 15km SW of Laverton. The target areas and drilling locations are summarized in Figure 1 and Appendix 1 with the drilling results summarized in Tables 1 and 2 and as follows. Soil sampling programmes are currently underway on targets HN4, 5 and 6. Further drilling is planned at target HN3 to extend the mineralized zone to the north and south.

Drill hole MHNRC02 was targeted at an IP chargeability anomaly in an area of historical drilling with shallow gold intersections. Rock types evident from previous drilling include meta- sediment (including carbonaceous shale), porphyry and carbonate rock.

MHNRC02 intersected a sequence of meta-sediment, carbonate rock and porphyry. Intersections include 3m @ 0.88g/t Au from 33m and anomalous 4m intervals with more than 0.1g/t Au as shown in Table 1.

3D modelling of these results with the historical drilling indicates a shallow (20 to 30m depth) N-trending 150m-wide mineralized shear zone dipping shallowly (10°-20°) to the west over a 150m strike length. Historical drilling to the north and south appears to have been far too shallow to intersect this interpreted mineralized position.

There are 52 intercepts with more than 0.5g/t Au and 18 intercepts with more than 1g/t Au, generally being 1 to 4m thick with the highest value of 1m @ 13g/t Au from 22m in hole HNRC007 (Table 3).

This area comprises the Emerald workings, a series of NW-trending gold diggings over a 200m strike length which intersect and sinistrally displace a N-S trending magnetic anomaly flanked by a pronounced linear magnetic low about 750m in length. Rock sampling of old gold

diggings along this 750m zone has returned values ranging from 0.41 to 3.88 g/t Au (Figure 3). Some of these gold values occur in a magnetite-bearing amphibolite interpreted to underlie adjacent porphyry outcrops, which is thought to be the cause of the linear magnetic high.

RC drill holes MHNRC03, 04 and 05 tested this magnetic target, intersecting a sequence of basalt and porphyry with several 4m intercepts of anomalous gold in the range 0.1 to 0.2 g/t Au (Table 1). Drill holes MHNRC07 and 08 were targeted on IP chargeability anomalies, again intersecting a sequence of basalt-intruded porphyry with several 4m intercepts, mainly in porphyry, in the range 0.1 to 0.2 g/t Au (Table 1). The cause of the IP anomalies is not yet clear. Two drill holes were targeted on the down-dip extension of the Emerald workings. MHNRC19 intersected 1m @ 2.11g/t Au from 18m in a quartz vein in basalt and 1m @ 0.43g/t Au from 39m in basalt. MHNRC20 intersected 4m @ 0.1g/t Au from 74m in porphyry.

Three traverses of shallow geochemical RAB holes were drilled across the target zone, intersecting anomalous gold values in the range 58 to 104ppb Au. Additional RAB traverses across the western IP chargeability anomaly and over a magnetic anomaly to the north did not intersect anomalous gold (Figure 3).